Gold development and mining company Osisko Development entered into a credit agreement with National Bank of Canada providing for a $50 million delayed-draw term loan through Osisko’s wholly-owned subsidiary, Barkerville Gold Mines.
Osisko will use the credit facility to fund ongoing detailed engineering and pre-construction activities at the company’s 100%-owned Cariboo Gold Project in central British Columbia, including the commencement of an underground development drift from the existing Cow Portal into the project’s mineral deposit at Lowhee Zone and extraction of 10,000 tons of material under an existing permit from the province of British Columbia.
“We are very pleased to secure funding that will enable us to commence the development of a 1.2-kilometer underground drift at Cariboo and advance important design and engineering work ahead of the anticipated receipt of permits in Q2 2024,” Sean Roosen, chairman and CEO of Osisko, said. “Completing this work is a significant step in further de-risking the project ahead of a construction decision by accessing the orebody and demonstrating the performance of the road-header and ore sorter technologies while we continue to progress toward sourcing a fully-funded solution for the project. Importantly, this facility is non-dilutive with no early repayment penalties and provides us with financial flexibility to refinance the facility prior to maturity. We appreciate National Bank’s strong support towards our vision of building Canada’s next gold mining district at Cariboo. Although the facility does not extend to our Tintic Project, it provides for more efficient capital allocation of our existing cash resources as we advance our ongoing porphyry drilling efforts and exploration of epithermal gold targets at Tintic.”
Key Terms Of The Credit Facility
- Credit Limit: $50 million.
- Term & Maturity Date: 12 months from the closing date, being March 1, 2025, which may be extended, at the lender’s sole and absolute discretion, to Aug. 1, 2025, upon written request by the company at any time between Dec. 1, 2024, and Feb. 1, 2025 (the maturity date).
- Repayment: The full outstanding credit under the credit facility, and all accrued and unpaid interest thereon, shall be repaid on the maturity date.
- Interest rate: Draws made under the credit facility can be made by way of a base rate loan or a term benchmark loan, on which differing interest rates will apply. Interest will be payable on the outstanding principal amount at a rate per annum equal to the following, provided that each such rate shall be increased by 0.5% per annum each 90 days following March 1, 2024:_x000D_
- For a Base Rate Loan: the greater of (i) the federal funds effective rate plus 0.5% and (ii) the National Bank variable rate of interest for U.S. dollar loans in Canada, plus (iii) 4% per annum.
- For a Term Benchmark Loan: (i) SOFR plus (ii) an additional 0.1%/0.15%/0.25% per annum for one/three/six month draws, respectively, plus (iii) 5% per annum.
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- Voluntary Prepayments: Subject to the terms and conditions of the credit agreement, the company may prepay the outstanding loans under the credit facility at any time, subject to a minimum prepayment amount of $1 million.
- Mandatory Prepayments: Mandatory prepayments are required in certain events, including in the case of asset dispositions, debt incurrence and equity raises, for which 100% of the net cash proceeds must be prepaid.
- Security: The obligations under credit facility are guaranteed by the company and secured by a first-ranking security interest against all of the present and future assets and property of Barkerville and the shares of Barkerville as held by the company.
- Representations, Warranties and Covenants: The credit agreement contains terms and conditions with respect to the credit facility customary for a transaction of this nature, including representations, warranties, borrower covenants, permitted liens and indebtedness, assignment rights and events of default. Specifically, the company covenants to maintain its tangible net worth (being shareholders’ equity less goodwill and intangible assets) to be at least C$500 million (~$368 million) as calculated the last day of each fiscal quarter and the company and Barkerville, on a consolidated basis, shall maintain liquidity (being all unrestricted cash plus available credit under the credit facility) of at least C$25 million (~$18 million) as of the last day of each fiscal quarter.
- Fees: In connection with the credit facility and National Bank’s services, the company agreed to pay the following fees to National Bank: (a) an upfront fee of 2% per annum on the principal amount, which has been paid in full; (b) a ticking fee equal to 1% of the committed principal amount of the credit facility, calculated on annualized basis, accruing daily commencing 30 days from the Dec. 20, 2023 until Jan. 31, 2024, which has been paid in full by the company; and (c) duration fees of: (i) 0.75% of the committed principal amount, payable as of May 30, 2024 if the credit facility remains outstanding on such date; (ii) 1% of committed principal amount, payable as of Aug. 28, 2024, if the credit facility remains outstanding on such date; and (iii) 1.25% of the committed amount, payable as of Nov. 26, 2024, if the credit facility remains outstanding on such date.
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